Chinese Metallic Money and Cash

Chinese monetary history is a topic that requires readers to leave behind certain concepts that have characterised our money for some time. The emergence of metallic money gave rise to two distinct traditions. The first, which the West has inherited, originated in Mesopotamia around the second millennium BC and is characterised by the use of precious metals as a payment instrument. The so-called intrinsic value of the money is determined by the weight and purity of the metal. In China, by contrast, money has had an eminently fiduciary character from the start. Its value was guaranteed by ties of trust between economic agents and the issuer, but most importantly by quantitative control of the coinage. Chinese metallic money, in general, was thus conditioned by its singular function, facilitating transactions. Currencies with a high intrinsic value (gold, jade, silver, tortoise shell, etc.) were used as stores of value. Putting these into circulation would have led to hoarding, which would have prevented them from serving their function.

From the second millennium BC, the use of cowry shells became widespread in the majority of the territories of present-day China. But these natural shells posed the problem of quantitative control, and the surge in trade made it necessary, even during this period, to produce imitation cowry shells made out of bronze, copper, stone, bone, etc. This was a fundamental step forward for the Chinese economy, because it signalled the transition from a natural money to one produced by craftsmen, and thus controlled.

Until the 3rd century BC, China had a feudal system comprising various kingdoms that periodically fought internal wars. These political rifts also gave rise, broadly, to three different kinds of metallic money. Each lord, as opposed to the king, was responsible for controlling currency, so each form of money evolved very differently. Agricultural regions used tools such as spades or knives, which little by little lost their original function and were miniaturised to serve as money (probably from the 8th century BC). Other regions adopted circular coins with a hole in the centre. The oldest examples of these coins appear to be in the 7th century BC, although their use as currency is not yet formally attested at that point.

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Moulded Cash coins

It was not really until the reign of Duke Xiao (361-338) of the Qin state that the first official circular coins with holes in the centre were issued, called Banliang. This term initially referred to the weight of the piece, which was ½ (ban) of a liang, equal to 8g. However, locally the term Banliang progressively came to refer not to the weight but to the actual money. Variations in weight thus began to appear from one coin to the next, but they retained the same face value. In the feudal era, different kingdoms used this type of coinage. The coins adhered to the same principles as in the Qin state, but were distinguishable by their writing, the care taken in their production, and even by certain typological details. The fiduciary nature of Chinese money in general made possible the simultaneous use, over a long period, of a multitude of different coinages, both metallic and non-metallic (bamboo money, notes, fabric, etc.).

Certain ancient texts indicate that sealed jars of a thousand coins, called pen, were used as an official accounting unit. Archaeologists have discovered some of these still intact, actually containing 1,000 coins, but from different issuers and of varying weights (in some cases from 2g to 12g). What we see is that in practice, and in every period, the simultaneous use of old and modern coins, heavy and light coins, worn and new coins was tolerated, provided that the coins took the traditional form. It is not uncommon, moreover, to find counterfeit money, tokens, or even amulets alongside legal coins in the pen. Similarly, while the coins were almost always made with the help of moulds, their composition varied immensely. Whereas copper was used extensively in the 1st millennium, its scarcity from the 1st century onwards and the lack of control over the melting process led to the use of iron, lead, bronze, and other metals, but without impact on face value.

The first major period of Chinese unification dates from 221 BC under the emperor Qin Shi Huang. While his reign was fleeting (221-206), it was an important stage in the dissemination of circular coins with a square hole. Chinese coins retained this aspect more or less until the founding of the Republic of China in 1912. The only real changes pertained to their composition, their inscriptions and their weight. They were standardised from the Tang Dynasty (618-907) onward, which makes dating relatively simple and precise. The Chinese used the term ch’ien for their coins. The first Europeans called them Cash, a term still widely used today, which they derived from the word the inhabitants of Malacca used for the coins, Caixa, when the Europeans first arrived in 1511.

When they opened to the West in the 19th century, the lack of money with intrinsic value required the Chinese to accept foreign currencies (dollar, Mexican peso, etc.). The West’s economic dominance progressively forced the Chinese to adopt the silver standard in the place of fiduciary money. Paradoxically, it was at this time that the West was discovering the advantages of fiduciary money. They thus gradually abandoned the outdated system that they had just imposed upon China in favour of a concept that had prevailed in China for more than 4,000 years.